Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Was on the buyside for 15 years, most recently at a medium-sized boutique asset management firm. I grew up in Europe, went to university in the US and have been living in Singapore for the last 7 years which has given me a broad scope on the world and investing in general.

Consider myself a generalist investor with a preference for small and mid-cap companies and special situations. However, a large cap that has gone temporarily out of favor might also pique my interest. 

My style of investing could be categorized as more of value investor, rather than growth at any cost. Learning from Charlie Munger on the importance of quality of a company has been of tremendous value over the years.I like businesses with real earnings, cash flows, dividends, book value and insider ownership.

Insight Provider

Della Valle/Tod's: Lowball Minorities Buyout

Tod's: After Sale of Versace to M. Kors One of Few Luxury Companies Remaining; LVMH Is Likely Buyer

Tod's: Not Likely a Standalone Business For Much Longer; LVMH Is a Logical Buyer

Tod's: Della Valle Family Ups Insider Buying to 64% Ownership; LVMH Remains Logical Final Stop

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

Italian shoe and handbag maker <a href="https://www.smartkarma.com/entities/tod-s-spa" target="_blank" data-smartkarma-citation="entities:21231:1" rel="noopener">Tod's SpA (TOD IM)</a> has been discussed as a takeover target for LVMH since 2017. See my previous insights in 2017, 2018, and 2019 for background.Yesterday, LVMH made its opening salvo raising its stake to 10% by acquiring 2,250,000 shares at 33.10 EUR per share (total value of 74.5 million EUR) from founder Diego Della Valle who will still control 63.64% after the transaction. Please note that Diego Della Valle is also a board member at <a href="https://www.smartkarma.com/entities/lvmh-moet-hennessy-louis-vui" target="_blank" data-smartkarma-citation="entities:21072:1" rel="noopener">Lvmh Moet Hennessy Louis Vuitton (MC FP)</a>.Tod's is in the early innings of potential brand revival having added 33-year old influencer Chiara Ferrangi to its board of directors earlier this month. Chiara has 23 million followers on Instagram alone.This follows news of Tod's appointing 42-year old Walter Chiapponi as its head designer in late 2019. Tod's goal is to try and push Tod's brand into the millenial "cool" bucket and revive sales after years of declines.The long-term age of Della Valle (67) means LVMH will acquire the brand outright in FY22/FY3. Before this happens Della Valle will attempt to maximize value for himself one last time.Tod's market cap has shriveled to 1.2 billion EUR (from 4.8 billion in 2013) which means it trades at just 1.5x P/S, 1.2x P/B, and 11x FY22 EV/EBITDA. P/S and EV/EBITDA are the right metrics here as weak execution and heavy investment in company-operated stores have meant the company was printing red-ink for the last three years. Luxury brands typically get sold between 15-20 EV/EBITDA.For Della Valle to sell his life's work it will require a much larger premium by LVMH to get his remaining shares. As highlighted in my 2019 insight large upside remains for Tod's minority shareholders from today's share price levels.

Italian shoe and handbag maker Tod's SpA (TOD IM) has been discussed as a takeover target for LVMH since 2017. See my previous insights in 2017, 2018, and 2019 for background.Yesterday, LVMH made its opening salvo raising its stake to 10% by acquiring 2,250,000 shares at 33.10 EUR per share (total value of 74.5 million EUR) from founder Diego Della Valle who will still control 63.64% after the transaction. Please note that Diego Della Valle is also a board member at Lvmh Moet Hennessy Louis Vuitton (MC FP).Tod's is in the early innings of potential brand revival having added 33-year old influencer Chiara Ferrangi to its board of directors earlier this month. Chiara has 23 million followers on Instagram alone.This follows news of Tod's appointing 42-year old Walter Chiapponi as its head designer in late 2019. Tod's goal is to try and push Tod's brand into the millenial "cool" bucket and revive sales after years of declines.The long-term age of Della Valle (67) means LVMH will acquire the brand outright in FY22/FY3. Before this happens Della Valle will attempt to maximize value for himself one last time.Tod's market cap has shriveled to 1.2 billion EUR (from 4.8 billion in 2013) which means it trades at just 1.5x P/S, 1.2x P/B, and 11x FY22 EV/EBITDA. P/S and EV/EBITDA are the right metrics here as weak execution and heavy investment in company-operated stores have meant the company was printing red-ink for the last three years. Luxury brands typically get sold between 15-20 EV/EBITDA.For Della Valle to sell his life's work it will require a much larger premium by LVMH to get his remaining shares. As highlighted in my 2019 insight large upside remains for Tod's minority shareholders from today's share price levels.

Tod's: LVMH Goes from 3.3%-> to 10%; 100% Next Year?